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Wednesday, 15 June 2011
Page: 6090


Mr RIPOLL (Oxley) (12:10): I begin by saying to the member for Wannon that he can rest assured that superannuation in this country is in very good hands, not only through the legislative changes we are bringing about through these three superannuation bills but also through the long-term commitment that the Labor Party, the labour movement and the ACTU have made to guaranteeing that ordinary working people in this country have access to superannuation for their retirement. I hear him talking about all his concerns and asking why the ACTU and everyone else should have a say, but in reality this is about ensuring the longevity and the absolute availability of superannuation in this country over a long period and maintaining full credibility for the superannuation system and the superannuation guarantee.

We have before us three excellent bills—the Governance of Australian Government Superannuation Schemes Bill 2011, the ComSuper Bill 2011 and the Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011. In summary, this package of bills is about good reform and about good governance arrangements in particular in relation to how these bills and schemes work in line with trends in the broader superannuation industry. No-one could criticise this government for not having done enough. We have done what is necessary to ensure the proper operation of superannuation, the superannuation guarantee and the superannuation industry in its broad application to the community. We have gone to great lengths to ensure not only that over the past 20 years with proper governance superannuation has survived, grown, become the basis of Australia's national savings and played an enormous role in getting this country through the global financial crisis but also that for the next 40 or 50 years, with changes and trends in the community, the proper governance mechanisms will be in place in line with what people expect.

The Governance of Australian Government Superannuation Schemes Bill implements directly the government's decision to establish a consolidated trustee—a very important part of getting the legislation right and making sure superannuation is right for the Australian government civilian and military superannuation schemes. The consolidated trustee body will be known as the Commonwealth Superannuation Corporation, the CSC, and it will be a Commonwealth authority for the purposes of the Commonwealth Authorities and Companies Act 1997. It is not at all like the member for Wannon and other members across the chamber were saying. If you listened to them, you would think that somehow we had just handed it over to people on the street and said, 'You manage according to your whim; do whatever you like with it'. In fact, the industry is highly regulated and has a great track record of good governance. These bills improve on that superb history. This governance bill will protect the unique nature of military service by, among other things, requiring the governing board of the CSC to have regard to what is unique about military service, as provided for in the relevant military superannuation acts. So, we are linking the two legislative areas together to make sure that we get it right. The bill also provides that the CSC is to be governed by a board. I do not think many people would argue with that. It is to be governed by a board based on a common model in the broader superannuation industry. It is a successful model which has delivered for ordinary people over many years. The ACTU and the Chief of the Defence Force will nominate three and two directors respectively. They will do that for a very simple reason: proportionally, the funds they represent are of quite substantially different sizes. The civilian fund is some $19 billion and the military fund is $4 billion, which is significantly less and the representation on the board reflects that. We have ensured that the representation not only is proportionate but also carries certain responsibilities about forming quorums and making sure that everybody has a say at the table.

In listening to the opposition in this debate, I heard the question, 'Why would you even have the ACTU at the table?' It is as though we somehow ought to carve away the body that represents workers in this country who were the people who created the superannuation guarantee, along with a really good Labor government which saw the need to get this right in the future. Why in the world would the other side continue to argue that these representatives either should not have any representation at all or they should have a diminished representation? I will leave it for people to decide for themselves why the opposition would go down that path.

It is quite simple. In my book, I say, 'Let's ask the working people who they would trust with their superannuation.' I think the numbers speak for themselves. If you have a look at where workers have their money linked to the market and growing properly, the safest places are in a whole range of very good industry funds. I think workers speak with their feet when it comes to where their superannuation goes.

If you listen to the other side you would think that somehow through the introduction of these good governance bills, these reforms and these improvements that it was the end of super—this is the message I am getting from the opposition. Somehow, this is the end. From this day forward, after we pass the bills, super will finish. Again, it is quite the opposite and I think it is very disingenuous of the opposition to speak in such a way about superannuation, the superannuation guarantee and particularly the civilian and military funds that we are talking about.

The Minister for Finance and Deregulation will choose the five employer directors as well. So you will get the employer directors, the military representatives and, through the ACTU, the workers' representatives. You will get a balance of what should be there, what has worked very well historically and what will continue to work even better in the future.

The ComSuper Bill 2011 implements a number of other government decisions to modernise and clarify the administrative arrangements of the schemes. It does this by establishing ComSuper as a statutory agency under the Public Service Act 1999. It will replace the Commissioner for Superannuation with a chief executive officer, which will give proper carriage to the way it is administered. The Superannuation Legislation (Consequential Amendments and Transitional Provisions) Bill 2011 amends a range of Commonwealth legislation to take into account the new trustee arrangements. It also makes particular changes to the governance of administrative arrangements and will include transitional arrangements to make sure these changes go ahead seamlessly.

These reforms will do a number of things, but through consolidating funds under management and reducing administrative costs they will provide a net monetary benefit for the people these funds are held for. It will mean an improvement in the superannuation returns to members, particularly for Defence Force personnel. This is an improvement because it gives them more money in their retirement. This is something that should be supported by the opposition. This is a good set of bills and measures. No-one can argue that increased economies of scale do not deliver better outcomes, and when it comes to superannuation schemes nothing can be truer than that fact.

The fact that we have consolidated both the civilian and the military funds under a single board means that the economies of scale will provide a greater advantage. I can even tell you how much of a greater advantage that will be. By way of example, if it was just a 0.5 per cent increase in the net investment return for a member of the RAAF who had joined as an officer cadet and rose through the ranks to become a group captain at retirement it would lead to an increase in superannuation benefits of $95,000 over that person's career. That is a substantial amount that I know would be welcomed by that particular serving Defence Force member. Even if it were just over 10 years of service it would mean an increase of $41,000. I do not think anyone can argue against the net benefits of the economies of scale. These bills not only go directly to good governance measures, to modernising and improving the methods by which funds operate but also will have a net tangible, visible impact on the membership by giving them more money in retirement. That should always be a focus—to increase efficiencies and get it right.

This government has not been slow not only in the area of reform but also in ensuring that members of superannuation funds get good, long-term returns. We can see that through the extensive work that has been done in this area by Jeremy Cooper in his review and through the reforms that have been carried out by the Assistant Treasurer, Mr Shorten, who is here at the table now. I know he is a great supporter and believer in the superannuation guarantee and in superannuation as a way to improve people's lives in retirement. Given that we have an ageing population, there is a greater need for people to fund their own retirement so that they can enjoy a better standard of living in retirement.

As I said, the significant benefits of this trustee consolidation will be delivered through the economies of scale. It will lower the investment costs and will potentially deliver much higher investment returns. Members of the Military Superannuation and Benefits Scheme—the MSBS—will benefit the most. Out of everyone who benefits here, they will benefit the most because of the smaller size of their fund. As I said earlier, the civilian fund is $19 billion and the military fund is $4 billion. Without the consolidation, members of the MSBS, which is comprised of about 93 per cent of all serving Defence Force personnel in this country as well as future personnel, would be disadvantaged compared to other public servants, other funds and the broader community. I do not think that is acceptable. Given that all of us in this place recognise the unique contribution that Defence Force personnel make, the sacrifices they make and the way they represent this country, we ought to continually be looking at ways to improve their lot, whether it is their Defence Force conditions or their superannuation and what they get in retirement. This legislation goes a long way towards doing just that. It will improve their investment value, it will reduce their fees and costs, and in the end it will be a really good outcome.

Without this change, the MSB board is unlikely to attract and retain quality board members and experienced and skilled staff due to its relatively small size. In the future, we will see funds consolidate and become larger. Economies of scale are extremely important in achieving stability and longevity, and safety for the superannuation funds. Small funds are not necessarily better; larger funds necessarily can be. There is a whole range of really good quality boards that have good quality people. If this does not get the support of this parliament then we would severely limit the capacity of smaller funds, particularly the military fund, to deliver the maximum it can for its members. I think that would be a tragic outcome. This legislation will have a measurably good impact in terms of the investment value at the end a person's career or even if the benefit is over a serving period of just 10 years.

A number of concerns have been raised about how you get to these positions and how you bring this about. The answer is quite easy. It is consultation. You talk to the military, Defence Force personnel, superannuants in this area, the public sector and the directors who are employees, and you come up with these benefits. That is exactly what this government have done and we have done it in a range of ways. We have also acknowledged the unique nature of military service. We have made sure that it is credible, legitimate and in consultation with all stakeholders.

Board composition has been an issue for the other side of the House. I am a little puzzled as to why they would focus on one narrow piece. When there is a range of good legislation and reform and you pick out just one little bit, and you twist that little bit to make it sound like it does something completely different from the intent of the legislation and the reform, then the focus of that argument ends up being far from the truth and far from reality. In this legislation, board composition provides that at least one chief of the Defence Force nominated as a director be present whenever the board considers any issues relating to the military schemes. That is a good thing because there ought to be a capacity for someone representing military personnel to be in the room at the table if a decision is to be made.

The establishment of the Defence Force Case Assessment Panel will be mandatory and the legislation prescribes its membership. It is not membership that is out of hand and created on a whim; it is actually legislated. It goes beyond this parliament and beyond this government. It has been done the right way. Previously the legislation gave the CSC discretion to establish this panel to review decisions which currently are the responsibility of the DFRDB Authority. This is good reform and we have done the right thing, and it goes the right way. I commend these bills to the House because I think they are positive. They are about saving money and about increasing the standard of living for people in their retirement. (Time expired)